ACT tops property hot spots

Just to add some fuel to the debate that has been raging lately over housing prices, an expert panel for magazine Smart Property Investment have identified Canberra top of a list of 50 investment hot spots.

The panel reckons the city’s high incomes and a scarcity of land would underpin strong growth in property prices.

Investment hot-spots were chosen based on their population growth, demand for housing, income level, employment, vacancy rates, previous capital growth and current gross rental yields.

Having seen three bedroom ex-govt houses selling in Goulburn for under $200K less than a year ago, I’m not surprised it’s considered an investment hotspot. An hour from Canberra city? I’m sure commuters in other capital cities would be content with a mediocre house an hour from the office for that sort of price.

I posted this on the ‘how’s the affordability’ comments but thought I’d share here too.

“In the 1980s, houses used to cost an affordable three times the median household income. In recent years, they have climbed to nine times the household income in Sydney, according to the 2011 Demographia International Housing Affordability Survey. And this is despite more households now having more than one breadwinner.”

There’s also a good graph on p11 comparing Canberra to other capital cities. Flawed metrics, but the bottom line is housing is less affordable (for people intending to live in those properties, that is), regardless of how you crunch the figures. Stamp duty comparison on p16 is also interesting.

I posted this on the ‘how’s the affordability’ comments but thought I’d share here too.

“In the 1980s, houses used to cost an affordable three times the median household income. In recent years, they have climbed to nine times the household income in Sydney, according to the 2011 Demographia International Housing Affordability Survey. And this is despite more households now having more than one breadwinner.”

There’s also a good graph on p11 comparing Canberra to other capital cities. Flawed metrics, but the bottom line is housing is less affordable (for people intending to live in those properties, that is), regardless of how you crunch the figures. Stamp duty comparison on p16 is also interesting.

I can think of at least two people I work with who live in Goulburn. They car-pool to split running costs and have about a 50 minute commute each way. They’re prepared to trade the commuting time and expense for house prices that are less than half of those in Canberra.

And in the great scheme of things, their commute is less than the 2 hour Gosford-Sydney commute of one of my neighbours when I was a kid.

I posted this on the ‘how’s the affordability’ comments but thought I’d share here too.

“In the 1980s, houses used to cost an affordable three times the median household income. In recent years, they have climbed to nine times the household income in Sydney, according to the 2011 Demographia International Housing Affordability Survey. And this is despite more households now having more than one breadwinner.”

There’s also a good graph on p11 comparing Canberra to other capital cities. Flawed metrics, but the bottom line is housing is less affordable (for people intending to live in those properties, that is), regardless of how you crunch the figures. Stamp duty comparison on p16 is also interesting.

Leaving aside the median for the moment, the simple fact is that if you are looking to buy an average 3 beddie in Canberra, you’re talking about $450k (median Kambah price for 2010) and given the large number of two income public servant families and two income contractor families which for the most part would be earning at least $150k+ gross, the 1980s 3 times annual household income for a house hasn’t shifted. I’m not suggesting every household in Canberra is bringing in $150k+, but this is the typical household you are competing against when bidding for that average house. This is a public service town and $150k is less than two APS6s or an EL1 and an APS3-4. There’s plenty of contractors I know that earn a lot more than that.

This is why those that like to imagine a massive property crash in Canberra are misguided. This could happen, but it would need either massive public service cuts or some other game changing event such as massive land release.

“In the 1980s, houses used to cost an affordable three times the median household income. In recent years, they have climbed to nine times the household income in Sydney, according to the 2011 Demographia International Housing Affordability Survey. And this is despite more households now having more than one breadwinner.”

ROFLMAO!

They can’t be particularly bright if they think that more households having access to more money should somehow make houses more affordable. Twits.

Then they suggest that the way to make houses more affordable is to simply flood the market with them. This, in a city where the water utility is talking about permanent water restrictions due to inability to secure supply. We’re a mountain town, with limited choices of where to source water from. We can’t just go double the population without thinking about where we get our fresh water, and what we’re going to do with our sewage.

I agree with the other methods mentioned: removing negative gearing for property investors will remove a significant advantage that investors have over home buyers.

Other options for affordability include arranging with a group of friends to buy houses and rent off each other.

Leaving aside the median for the moment, the simple fact is that if you are looking to buy an average 3 beddie in Canberra, you’re talking about $450k (median Kambah price for 2010) and given the large number of two income public servant families and two income contractor families which for the most part would be earning at least $150k+ gross, the 1980s 3 times annual household income for a house hasn’t shifted. I’m not suggesting every household in Canberra is bringing in $150k+, but this is the typical household you are competing against when bidding for that average house. This is a public service town and $150k is less than two APS6s or an EL1 and an APS3-4. There’s plenty of contractors I know that earn a lot more than that.

This is why those that like to imagine a massive property crash in Canberra are misguided. This could happen, but it would need either massive public service cuts or some other game changing event such as massive land release.

What are you trying to suggest? If households earning far in excess of the mean household income are looking to buy $450k houses in Kambah at far below the median house price (~$550k), who is buying the majority of houses that sell in Canberra?

Statistically speaking less than 30% of households in Canberra are making 150k+. You can’t just take the top 30% of households and say they are representative of the wider community, and therefore the 1980s mean hasn’t changed. It has changed massively.

Be very careful with the ABS numbers for household income, I’m 99% sure they include imputed rents, which while necessary for comparing household income between different countries, isn’t really something the average person would considered to be a part of “household income”.
(imputed rents = the imaginary income owner occupiers enjoy because they aren’t renting, ie: the rent they pay themselves)

I guess what I’m trying to say is that if you took that comment of 1980s vs now, you’d assume that no Canberrans could possibly afford a house. Instead what I see is a similar situation now as it was in the 80s, i.e. a working couple making ok money can still afford to start out buying in an ok suburb such as Kambah. This hasn’t really changed.

Now it takes a family making big coin at the top end of the income scale to buy the average house.

And as (I assume) the owner of one or more of said houses (bought before the bubble) that’s fine with you.

I would be fine with me, too, if I were in your shoes, but don’t try and convince me that Canberra houses are affordable or that a situation where the average family cannot buy the average house is sustainable or good policy.

I guess what I’m trying to say is that if you took that comment of 1980s vs now, you’d assume that no Canberrans could possibly afford a house. Instead what I see is a similar situation now as it was in the 80s, i.e. a working couple making ok money can still afford to start out buying in an ok suburb such as Kambah. This hasn’t really changed.

Except back then we could all afford to buy a house in an inner suburb. When my mates & I all bought our first homes in the late 90′s, a shitbox in Narrabundah was $67K. A decent house in O’Connor was about $160K.

Of course some smug people seem to mistake luck for cleverness.

When I moved back to Canberra several years ago, I saw the inner suburb prices were stratospheric so I decided to look at a new development in Gungahlin. They wanted something like $200K. JUST FOR THE LAND!!!! (And it was all of about 350m2, at that, 1/3rd the size of the block in Narrabundah I bought in 1998 for $140K).

So you can’t get a cheap used house, and new developments are obviously poor investments due to over-pricing.

Where does that leave today’s first-homebuyer? Smug comments from people patting themselves on the back for getting lucky don’t really help.

Normally I’d agree with that sentiment. As a contractor of many many years I’ve heard ‘…money grabbing contractor….’ so many times; i usually reply with ‘i dont get paid holiday’s, sicko’s etc etc’ and ‘if it is so good, come join the ranks – If you can’t beat em, join em’

However, with the ACT house market I’d be very nervous about getting on the band wagon at this point. There are a number of reasons;

– I can’t see the Federal Gov pumping more and more tax payers money into public servants pockets at the rate they have been doing for the few years. At some point the Australian tax payers will say enough is enough and the ballot box will bring in either a slash-and-burn or attrition-based PM.

- Many friend’s offsprings are moving away from Canberra as they cannot afford to live here.

- I know of many people (directly and through my wife) having to house share & some who have had to move back into parents homes.

- Through her work, my wife is seeing more folk with depression caused by exhaustion and kids with issues due to parents being overworked. Is it because folk here are having to work their backsides off just to afford to live here?

- And finally, we know of quite a few folk who are having to have multiple jobs; working daytime and evenings just to get by. The result probably feeds into the last two points.

None of the above is healthy for a society and something has to give. Whether it snaps or gradually moves back cant be foreseen, but certainly it would make me nervous getting into the Canberra property rat-race at this stage and borrowing a huge amount of money. If I was an investor who bought here 10 years ago then I’d certainly be considering liquidating my asset/s and moving the profits made into other areas (whether that be property in Goulbourn or totally elsewhere).

But, as has been proved in the past numerous times, I could be completey wrong.

Canberra has grown. Simply supply and demand will dictate that not all of us can buy a nice plush house in the inner suburbs. HenryBG is suggesting that he’s too good for outer suburbs. Even back in the 80s and before, those starting out would buy smaller houses in outer areas and upgrade later. A lot of this un-affordable housing talk seems more to be about not being able to afford the new mansion in an inner block. Is this part of the I want it all and I want it now generation? Back in the 80s and earlier, people had to save really hard for a big deposit, would compromise on a small house without the mod cons in an outer area and then upgrade later when they were a little more settled.

At some point the Australian tax payers will say enough is enough and the ballot box will bring in either a slash-and-burn or attrition-based PM.

If that does happen, my advice would be to buy, buy, buy!

Any downturn won’t last for long as the Government soon realises that they need plenty of public servants to implement their popularist middle class welfare, war mongering, terrorist conspiracy, refugee hating, anti dole blugger policies that got them elected. Even after Howard decimated the public service, it grew back to be bigger than ever within 10 years.

Canberra has grown. Simply supply and demand will dictate that not all of us can buy a nice plush house in the inner suburbs. HenryBG is suggesting that he’s too good for outer suburbs. Even back in the 80s and before, those starting out would buy smaller houses in outer areas and upgrade later. A lot of this un-affordable housing talk seems more to be about not being able to afford the new mansion in an inner block. Is this part of the I want it all and I want it now generation? Back in the 80s and earlier, people had to save really hard for a big deposit, would compromise on a small house without the mod cons in an outer area and then upgrade later when they were a little more settled.

No it’s nothing to do with wanting a new mansion on an inner block, no matter how much people keep trying to push this line it’s completely false.
In the 80′s, the poorer families bought a house in the outer suburbs because that was what they could afford. People on higher incomes were able to afford inner suburbs.

Now, the people on higher incomes can only afford a house in the outer suburbs and the poorer families are locked out all together. It’s completely unsustainable.

I guess what I’m trying to say is that if you took that comment of 1980s vs now, you’d assume that no Canberrans could possibly afford a house. Instead what I see is a similar situation now as it was in the 80s, i.e. a working couple making ok money can still afford to start out buying in an ok suburb such as Kambah. This hasn’t really changed.

Yes it has. A single income person (be they a family or a single person) can’t buy that Ok house in Kambah, but in the 90s they could. That’s changed. That OK house in Kambah was $140,000 in the 90s. Now it’s half a million dollars. But ordinary salaries haven’t kept pace with that increase. That’s changed. Great bonanza for those who bought that house for $140k, out of reach for someone on the average salary.

housing is not a luxury, it’s a necessity. That increasing numbers of people here cannot afford. One day if you’re wanting to challenge your assumption, at 8am go park yourself at the Welcome To Canberra sign on any of the roads leading into Canberra, and watch the river of cars coming in from the towns around the ACT. Those are Canberra people, who now have to live where they can afford a home. Cooma, Braidwood, Goulburn, Yass. These are the “outer suburbs”.

Having seen three bedroom ex-govt houses selling in Goulburn for under $200K less than a year ago, I’m not surprised it’s considered an investment hotspot. An hour from Canberra city? I’m sure commuters in other capital cities would be content with a mediocre house an hour from the office for that sort of price.

You might have a good point here. Also, Goulburn would be very easy living for people who regularly work from home and occasionally commute to Canberra (1hr) and/or Sydney (2.5 hrs). The train to Sydney is even viable from Goulburn as it picks up the Melbourne to Sydney line as well as the Canberra line.

Having seen three bedroom ex-govt houses selling in Goulburn for under $200K less than a year ago, I’m not surprised it’s considered an investment hotspot. An hour from Canberra city? I’m sure commuters in other capital cities would be content with a mediocre house an hour from the office for that sort of price.

Investment hot spot? I see inner north with walking distance to city as a hotspot, In one of my places about 5mins to the city lol.

Having seen three bedroom ex-govt houses selling in Goulburn for under $200K less than a year ago, I’m not surprised it’s considered an investment hotspot. An hour from Canberra city? I’m sure commuters in other capital cities would be content with a mediocre house an hour from the office for that sort of price.

Investment hot spot? I see inner north with walking distance to city as a hotspot, In one of my places about 5mins to the city lol.

If you’re looking for a larger, more expensive house, there are some real bargains out there at the moment. I picked up a new home a couple of weeks ago for a big discount over what I thought it would sell for. The under $500k market seems fairly strong, though.

I bet the people whinging about not being able to afford houses are the same people who eat out every night, travel overseas every year and sending their 3 kids to private schools. Something has to give…

I bet the people whinging about not being able to afford houses are the same people who eat out every night, travel overseas every year and sending their 3 kids to private schools. Something has to give…

Saying “I bet” doesn’t make something a fact. In this case, it’s not even close to the reality.